What is Agile supply?
Agility reflects the ability of an organisations supply chain to react to consumer demand, market changes and volatility and the shortening lifespan of a product range.
An example of this could be a company that has a stock holding of a base product that is a “work in progress” that can be customised quickly to meet a specific consumer requirement, another example is a production process that isn’t constrained by making mass produced items but can differentiate products and quickly react to meet demand and changes in the market.
Agility allows companies to reduce costs and rationalise inventory by anticipating demand as effectively as possible.
What is the difference between Lean and Agile?
For an organisation to be ‘lean’ it must have had all non-essential resources removed (ie. anything that does not add value). This is efficient and cost effective, in that the value/supply chain can theoretically do exactly what is needed of it and no more, but requires sound forecasting and planning of demand and supply. It is most suitable for industries with stable product specifications, long lead times and few impulse purchases.
Organisations which are ‘agile’ react as quickly as is practicable to provide a cost effective response to customer demand. This is based on flexibility in design, supply, production and distribution. It is most appropriate for products such as fast fashion and foodstuffs which must be on display and available when wanted by the customer.
Why would a company use agile supply?
Agile supply enables a company to:
- Rationalise inventory
- Reduce costs
- Build a predictable supply chain
- Agile supply chains can adapt to meet unpredictable customer demand in a rapidly changing and volatile trading environment.
- Agile supply chains have the capacity to produce a broad product range with a fast turn around time
- Rationalising inventory levels and reducing costs supports the increase in profit margins.
What are the benefits of agile supply?
However agile supply chains are not suitable for all organisations and in some instances technical or human errors can restrict agility, a deeply embedded culture or lack of investment in enabling technologies can also restrict the success of agile supply.
To find out more about this subject read the full knowledge paper: Agile Supply and Lean and Agile
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